Ensuring the Role of Natural Gas Utilities in the New Energy Economy

1. Usage Guidelines Slide Description:Cover Slide Usage:Introductory slide. Try to keep the slide title and subtitle short and clear. Optionally include name, company role, and presentation date. The default title format is Verdana 26pt with shadow. The default subtitle format is Verdana 17pt Italic with shadow. These defaults are already built in, so you are free to just replace the text that is currently shown. If you paste text in from another presentation, be sure it is formatted correctly. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Ensuring the Role of Natural Gas Utilities in the New Energy Economy AGA Accounting and Finance Committee August 12, 2009 Paula A. Gant Vice President, Regulatory Affairs

2. A Vision for a New Energy Economy 50% reduction in energy intensity of the U.S. economy by 2030

3. Usage Guidelines Slide Description:Standard Table Usage:These slides are used for information best conveyed with a table. The table on this slide is native to PowerPoint and has not been pasted from Word or Excel. Once you have placed the cursor into the table, you can use the TAB key to move forwards through the table. SHIFT-TAB will move you backwards. If you need to change the formatting of a table, right-click on the table and select “Borders and Fill.” There you can choose from numerous formatting options, such as “shading” a particular area of the table to highlight key information. You can use a small triangle or arrow to add emphasis to a highlighted area. If you need to delete sections of a table (rows or columns), select the area in question (by left-clicking and dragging), then right-click on the area you have selected and choose “delete.” To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Declining Use per Natural Gas Residential Customer Since 1970 MCF per Year Sources: U.S. Energy Information Administration and American Gas Association Note: Data is “weather normalized” or adjusted to reduce the impact of abnormally warm or cold weather.

4. Usage Guidelines Slide Description:Single Series Column Usage:This slide has a Microsoft Graph placed on it (not from Excel). Right click on this graph, choose “Chart Object” and then choose “Open.” This will open the graph in Microsoft Graph, allowing you to change the data and visualization. Note the lack of a y-axis. To make the y-axis visible again, open the chart and select the “Chart ” menu item. On the dropdown menu choose “Chart Options.” Next choose the “Axes” tab on the window that appears. Finally, check the box labeled “Value (Y) Axis.” To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Residential Natural Gas:Average Consumption vs. Average Number of Customers Average Total Natural Gas Residential Consumption Average Number of Households Served Bcf per year Millions of Households Sources: U.S. Energy Information Administration and American Gas Association

5. Usage Guidelines Slide Description:Quarterly Columns Usage:This slide has a Microsoft Graph placed on it (not from Excel). Right click on this graph, choose “Chart Object” and then choose “Open.” This will open the graph in Microsoft Graph, allowing you to change the data and visualization. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” U.S. Natural Gas Customers Lead in Reducing Greenhouse Gas Emissions Number of Households Tg CO2 Emissions Sources: EIA, Gas Facts, EPA (Inventory of US Greenhouse Gas Emissions & Sinks 1990-2006).

6. Tons of CO2 Emissions* Per Residential and Commercial Natural Gas Customer *From consumption of natural gas only Source: Calculated from Energy Information Administration data

7. Natural Gas Is By Far The CleanestOf All Fossil Fuels Pounds of CO2 Per MMBtu Source: U.S. Energy Information Administration.

8. Shale Basins and the U.S. Pipeline Grid Source: American Clean Skies Foundation.

9. Priority AGA Advocacy Items • Updating federal appliance efficiency labeling standards to measure energy use and environmental impact on a full-fuel-cycle basis through changes to the current statutory definition  of ‘energy use’ and direction to DOE • Carbon Footprint Labeling for Appliances -- A proposal put forward by AGA to add carbon footprint information to appliance labels appears in ACES 2009 • Carbon Footprint Labeling for Buildings – AGA proposes to expand the national model building energy performance labeling standard proposed in ACES to include carbon footprint information • Natural Gas high-efficiency, low-carbon natural gas end-use R&D Initiative

11. American Clean Energy and Security Act of 2009 House • comprehensive energy legislation to deploy clean energy resources, increase energy efficiency, cut global warming pollution, and transition to a clean energy economy • Voted out of U.S. House June 26 • Intent is to reduce economy-wide global warming pollution to 97% of 2005 levels by 2012, 80% by 2020, 58% by 2030, and 17% by 2050 -- 83% by 2050

12. American Clean Energy Leadership Act of 2009Senate • Energy and Natural Resources Committee approved June 17 • Likely to be considered by full Senate in October Would: • Require Outer Continental Shelf resource inventory • Open Eastern Gulf of Mexico to exploration and production • Give FERC cease-and-desist authority • Strengthen appliance efficiency standards • Strengthen DOE-EPA Energy Star programs • Increase building efficiency requirements • Targets for residential and commercial model codes • Provide grants to states for building retrofits • Establish model energy performance labels for buildings

13. States with Decoupling and Flat Monthly Fees As of July 2009

14. States with Energy Efficiency Programs and Earnings Source: American Gas Association, May 2009.

15. Usage Guidelines Slide Description:Combo Column/Line Usage:This slide has a Microsoft Graph placed on it (not from Excel). Right click on this graph, choose “Chart Object” and then choose “Open.” This will open the graph in Microsoft Graph, allowing you to change the data and visualization. Note the addition of a second y-axis and associated graph line. [This type of chart is also commonly used for price/volume data.] To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Natural Gas Utility Energy Efficiency Programs • In the 2007 program year, gas utilities in the U.S. budgeted nearly $500 million for energy efficiency programs • About a third ($163 million) was budgeted for residential programs • Program budgets have more than doubled since 2006 Source: Nevius M, Krouk J, Griffith S, Lasky C, “Reaching Higher: Annual Industry Report 2008,” Consortium for Energy Efficiency, 2008.

16. Usage Guidelines Slide Description:Dual Columns Usage:This slide has two Microsoft Graphs placed on it (not from Excel). Right click on either graph, choose “Chart Object” and then choose “Open.” This will open the selected graph in Microsoft Graph, allowing you to change the data and visualization. Note the lack of y-axis. To make the y-axis visible again, open the chart and select the “Chart ” menu item. On the dropdown menu choose “Chart Options.” Next choose the “Axes” tab on the window that appears. Finally, check the box labeled “Value (Y) Axis.” To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Natural Gas Utility Energy Efficiency Programs • Impacts of gas utility energy efficiency programs in 2007: • 218 million thermssaved • Nearly 1.3 million tons of CO2 prevented from being released into the atmosphere Source: Nevius M, Krouk J, Griffith S, Lasky C, “Reaching Higher: Annual Industry Report 2008,” Consortium for Energy Efficiency, 2008.

17. Impact of Climate Change Legislation on Outlook for Natural Gas SHORTER TERM LONGER TERM

18. What does this mean for natural gas utilities? • Market is increasingly customer driven • Delivering “comfort and productivity” • Regulatory structures will evolve • Importance of R&D • Near to mid term opportunities, long-term challenges • Energy and efficiency services • Renewable natural gas • Transportation • Distributed energy • Low-carbon natural gas • Smart Grid • Net Zero buildings • New players entering the space

19. AGA Vision 2020 • Today and in the future, natural gas is recognized as being an important part of the solution to climate change and other energy and environmental issues. There are regulatory constructs and business models that can provide utilities the opportunity to remain financially viable and grow. • Near term, the direct use of natural gas in available end-use technologies for homes, businesses and industries is recognized as being more environmentally friendly (emits less carbon), more efficient and more cost effective than other energy options, and provides economic, energy and national security. • Longer term, new end-use technologies will enter the marketplace that not only will allow the direct use of natural gas to successfully compete with other energy options, but also will be the low-carbon domestic fuel of choice from the standpoint of supply, infrastructure, reliability, efficiency, affordability and the environment, and economic, energy and national security.

20. Beyond “A Faster Horse”

21. Usage Guidelines Slide Description:Contact Info Usage:Last slide of presentation. Insert name, role, contact number and email address. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Paula A. Gant Vice President Regulatory Affairs pgant@aga.org www.aga.org The American Gas Association, founded in 1918, represents 202 local energy companies that deliver clean natural gas throughout the United States.  There are more than 70 million residential, commercial and industrial natural gas customers in the U.S., of which almost 93 percent — more than 65 million customers — receive their gas from AGA members. Today, natural gas meets almost one-fourth of the United States' energy needs.